July 31, 2010

No, it’s not a link to the cute Bugs Bunny cartoon by the same name…(actually it’s called Water Water Every Hare).

It is Chris Martenson’s continuing series to get you prepared. Another brilliant post, this time on water storage and filtering, click here.

Make sure you read all the comments, lots of great suggestions there. Groovygirl really liked the one about frozen water bottles in the freezer. Groovygirl recommends the brand names that Chris is suggesting, but you can investigate on your own.

Groovygirl’s other suggestions in addition to those in the article:

If you want a small portable filter unit for camping and hiking, KATADYN makes several low and high priced water bottles and small water pumps. The price is determined by how many bad bugs you want to clean out.

If you don’t have access to a well, as mentioned in the post, but need to water your garden, there is a “pop-up” rain barrel available. Just google it, you will find several companies that make them.

Regular rain barrels are good too, but the pop-up one can easily go from one place to another (once it is emptied). It folds away for winter’s cold weather and travels easily, if necessary. It is also a great second water storage unit for gardening.

The pop-up version is not as durable as a hard plastic or wooden rain barrel, but it a nice first step and/or addition to your rain catchment system.

Although I really like Chris’ water storage container suggestions, if you can’t afford them right now, just store water in plastic jugs away from light and heat. It is not a long-term solution, but stored water now is better than no stored water at all.

Side musing: very good (new) interview with John Williams from shadowstats.com. Click here. A must listen.

July 30, 2010

Groovygirl finally found a good article about commodity investing. At this time, groovygirl is out of all markets except precious metals. Soon commodities will be a good investment for the long-term (after we get past this debt implosion). However, it is difficult for the average investor to go buy a futures contract or take delivery of a warehouse of grain. The investor must invest in commodities through a financial house. It is there that we have the problem, ethical investment houses are hard to find and you must read the prospectus very carefully. As a result, groovygirl doesn’t make fund recommendations.

But this article does a very good job of explaining how the system works and where the risks lie.

ETFs are very risky long-term, as the article will show. This is why groovygirl does not recommend GLD or SLV ETFs. Go buy a coin at your local pawn shop. Commodity funds might be a good choice, but there are risks that need to be added into the equation.

The risks are clearly outlined in the prospectus, Tuckwell says, and anyone who doesn’t understand the product first shouldn’t buy it.

Side musing: the statement that will most effect you in the future is hidden:

These days, the Wall Street banks are more like those grain traders than you might think. They have equipped themselves to take delivery of raw materials when they choose to, so they can wait for the commodity price to rise without having to roll contracts, giving them another advantage over ETF investors. Goldman owns a global network of aluminum warehouses.

In the future, investment houses, like GS, will control the price of food. (Actually, they already are, but the average person in the US can still afford food, for now.) This is very dangerous and extremely unethical. Be very aware of this fact and protect yourself as much as possible. Watching the price of bulk grains at your local store and buy and store on dips. Go in with a group of people and buy in bulk. Buy and eat grains that are not traded as sole commodities on the exchange, like amaranth or quinoa, this is a form of “starving the beast”.

Your congresscritters hard at work getting nothing productive accomplished (again). Groovygirl’s unanswered question..who slipped that in? That would be an interesting eye opener. Groovygirl is still not panicked about this quite yet, but she has let her congresscritters know how she feels about it.

at Ambrose Evans-Pritchard’s latest article. Click here for the full article, The Death of Paper Money.

OK, let’s assume that the US will experience at some point in the future a hyperinflationary event and fall out similar to the Weimar Republic in Germany during the 1920’s. Groovygirl has a few comments.

“Velocity took an almost right-angle turn upward in the summer of 1922,” said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to “smell a government rat”.

Groovygirl: this will happen. The distrust of government and Wall Street is already occurring. Ben, Tim, and Obama lose more creditability every day. The USDollar will be a “hot potato” very soon nationally and internationally.

But fact that O Parsson’s book is suddenly in demand in elite banking circles is itself a sign of the sort of behavioral change that can become self-fulfilling.

Groovygirl: I could not agree more. Big investors requesting physical gold and silver is a reflection of the same pattern. Big players are nervous and uncertain even as they control government policy. That means they think that these financial issues are systemic and out of the ultimate control of anyone. They are protecting themselves as much as possible.

Near civil war between town and country was a pervasive feature of this break-down in social order. Large mobs of half-starved and vindictive townsmen descended on villages to seize food from farmers accused of hoarding. The diary of one young woman described the scene at her cousin’s farm.

Groovygirl: now this was Germany, how might starving mobs in the US respond? Loot grocery stores? Warehouses? Freight trains and trucks? I doubt they would attack farms directly, they don’t know how to butcher a cow or mill grain. Would they loot banks because they can not get more than $100 cash at a time?

Grand pianos became a currency or sorts as pauperized members of the civil service elites traded the symbols of their old status for a sack of potatoes and a side of bacon. There is a harrowing moment when each middle-class families first starts to understand that its gilt-edged securities and War Loan will never recover. Irreversible ruin lies ahead. Elderly couples gassed themselves in their apartments.

Groovygirl: there will be panic as the middle class sees their savings fall away to complete poverty. Treasuries and bonds will be worthless. Banks accounts wiped out. There will be many murder-suicides. But that is not for us. We have a plan to survive, a network of people to assist us, and hope that the spring economic cycle will be here very soon. The winter economic cycle will end, it doesn’t go on forever.

Foreigners with dollars, pounds, Swiss francs, or Czech crowns lived in opulence. They were hated. “Times made us cynical. Everybody saw an enemy in everybody else,” said Erna von Pustau, daughter of a Hamburg fish merchant.

Groovygirl: low economic profile.

Great numbers of people failed to see it coming. “My relations and friends were stupid. They didn’t understand what inflation meant. Our solicitors were no better. My mother’s bank manager gave her appalling advice,” said one well-connected woman.

Groovygirl: this is already happening as people say “we are in a recovery” and “invest in stocks for the long-term”. Well-connected will not guarantee you good advice.

Corruption became rampant. People were stripped of their coat and shoes at knife-point on the street. The winners were those who — by luck or design — had borrowed heavily from banks to buy hard assets, or industrial conglomerates that had issued debentures. There was a great transfer of wealth from saver to debtor, though the Reichstag later passed a law linking old contracts to the gold price. Creditors clawed back something.

Groovygirl: as I stated on my K-wave page, crime will rise. It will be tempting to run up debt and default. This is not a good idea. I believe that the new USDollar or global reserve currency will work in as much past and defaulted debt into itself as possible. Better to remain as debt free as possible throughout the whole crisis.

A conspiracy theory took root that the inflation was a Jewish plot to ruin Germany. The currency became known as “Judefetzen” (Jew- confetti), hinting at the chain of events that would lead to Kristallnacht a decade later.

Groovygirl: this is the dangerous part. I have warned against this before. People will want to blame others for this crisis. Groovygirl can see the blaming of foreigners and illegals coming. Do not get dragged into this kind of thinking. It is unproductive. This crisis is the end of an empire, end of a fiat currency, end of an economic cycle. This is a cycle and has nothing to do with 911 or immigration. Those situations are symptoms not causes of the path we are on… started long ago before the industrial age. (Do not think that you have cured the lung cancer by surpressing the cough.) The cause is the End of Paper Money, everything else is a fallout from that and nothing else. Put your energy and talents into being proactive for the spring cycle, not reactive to the winter cycle.

The Carthaginian peace of Versailles had by then poisoned everything. It was a patriotic duty not to pay taxes that would be sequestered for reparation payments to the enemy. Influenced by the Bolsheviks, Germany had become a Communist cauldron. partakists tried to take Berlin. Worker `soviets’ proliferated. Dockers and shipworkers occupied police stations and set up barricades in Hamburg. Communist Red Centuries fought deadly street battles with right-wing militia.

Groovygirl: expect several major fractures in the US. Warren Pollock’s video on American Disassembly is very interesting. Click here. Groovygirl thinks that the Patriotic Act and other policies stemming from 911 will have a similar effect as the Carthaginian Peace of Versailles after WWI. Looks like it will address the issues, but just causes major systemic problems in the end, setting all of us up to fail. It is really too bad.

Groovygirl doesn’t think the hyperinflation fall out will be that severe or that severe for as long as in Germany. Because the USDollar is the world’s global currency and the world will demand a solution immediately. Now keep in mind that solution may not help Main Street in the least, but it could get commence moving from dead stop to snail pace.

For the record, groovygirl is in the hyperinflationary depression camp triggered by a collapse in the USDollar around 2015.

Side musing: Jim Rickards talks about the end of the empire on kingworldnews.com, echos this post and groovygirl’s personal opinion. Click here.

Side-side musing: from Jim Sinclair’s website. Uncle Harry and Jim Sinclair know what they are talking about. A sudden hyperinflation event is the same as Martin Armstrong’s “waterfall effect”. :

My Dear Friends,

The following note preceding the excellent article written by Ambrose Evans-Pritchard is from the man who I consider the “Dean of Gold,” Harry Schultz.

This is what the Goldmans of the world are in the process of positioning themselves for at your expense.

At the same time many in the gold community are in the bathtub with their razor blade kit. Please, no cutting yet.

Regards,
Jim

Dear CIGAs,

Hyperinflation will come overnight as Jim predicts. Forget gradual.

How do you protect assets and food? Hide stuff. Avoid medium profile. The following article describes how bad it got in German hyperinflation and how dangerous it was to even own a painting. Read it all, then plan appropriately.

Manufacturing index is awful: click here. We are in a major economic contraction. Nothing is fixed, next downturn coming soon.

Baltic index is just as bad. Click here. No one is shipping anything, just like in 2008, they are docking the storage containers and slowing production. Nothing is fixed.

FDIC is kicking the can 10 years down the road. This is a slow melt-down of the banking system. Click here. Banks are not fixed.

Wikileaks latest release: click here. The war(s) front is not going well. Where the heck is congress? Iraq is a cluster. Now proof that Afgan is the same, and we are talking about war with Iran and North Korea? What are they thinking?

At some point very soon, the US will be alone at war with the world. The Industrial Military Complex seems to completely ignore this blinding reality. China doesn’t need to go to war with us, we have enough rope to hang ourselves without anyone else’s help. China will just wait.

European banks are insolvent, papered over last year. Click here. Nothing is fixed. Just waiting for the next panic and then more paper.

QE2 has already started. Click here. It will do as much good as QE1. Nothing is fixed.

The Financial Reform Bill fixes nothing, especially the big grenade, derivatives. Click here. Lots of land mines out there, waiting to be stepped on, and nothing is fixed.

Missing emergency drugs…click here. Strange. Must be more to this story.

Continue to work your plan to protect your investments and family. This is going to get ugly. All the systems we have counted on are set up to come tumbling down. It is the end of the empire, the low of the cycle.

In 2004, the government stopped requiring Fannie and Freddie to publish independently verified financials.

In 2006, the Feds stopped publishing the M3.

When business and government can not manipulate the numbers anymore to cover their questionable actions or the real state of the markets, they stop making stats public. They do this in reaction to the inevitable.

Groovygirl agrees with the author, Adrian Douglas:

I have recently written a series of exposes of the LBMA (see References 1-4 below) using the association’s own data to show that the LBMA’s bullion banks are operating on a “fractional reserve” basis. My analysis indicates that the bullion banks are holding only 1 real ounce for about every 45 ounces of gold that they have sold, a reserve ratio of just 2.3 percent

I interpret the LBMA’s move to secrecy as a sign that the opportunity to get real metal is closing fast.

Make sure you have your physical metal soon. Groovygirl thinks the time to get the real metal will get longer and longer. Then some high level private investors (that are late to the game of getting their physical metal back) will start to make some noise. No physical gold available at any price, but that fact is hidden from public view while the large private investors scramble before the physical metal window completely closes. Then the price will start to accelerate. Then the average investor will see the writing on the wall…..the USDollar is dead and they want gold. But by that time, no physical gold will be found. I give this process 3 years. At that point, you can only invest in paper gold until that market fails.

There will be ups and down in the gold price moving forward because of rumors of a broken gold market. We will not know when it breaks, because now rumors are pretty much all we have.

There is no harm in investing a paper metal market as long as you know it is a paper metal market and what the ratio to the physical metal is. As fiat currencies fail, the paper gold market will become popular and many investors will assume it is the same risk as physical gold. It is not. It is the same risk as paper money. There will be confidence in it, until there is no more confidence in it.

Physical gold has no other person’s liability attached to it.

Side musing: just released paper on gold vs. paper from Longwave Group click here.

July 26, 2010

There is a very important concept for you to understand. For the USDollar, China, and your personal planning from Jesse at Cafe American.

Whether the dollar is blown up because China makes a selling move or because the world just loses confidence, it doesn’t matter. This will happen, it is just a matter of time. Hold natural resources and precious metals personally as much as possible, that is China’s plan. It is a good plan because the wealth of the world is about to shift to the East.

It’s the Goldfinger Syndrome. As you may recall, Auric Goldfinger did not wish to steal the US gold supply, at that time the currency of the nation, from Fort Knox. He merely wished to eliminate it, making his own substantial gold holdings significantly more valuable. It is a form of increasing value through deflation, a concept that is much more familiar these days thanks to quite a few amateur economists patiently waiting for the US dollar to gain in value because of it.

But that is not how fiat currencies work at the end of their life span. But that is how natural resources work when fiat currencies are at the end of their life span. If China has lots of natural resources and/or access to lots of natural resources and everyone else has just dollars, they can drop the dollar bomb. There will be fall out for them, but they will be on top of the economic world with the new real wealth. Let groovygirl make something clear, I do not think that China is orchestrating this situation, but I do think they recognize it and are taking long-term precautions to protect their country from a financial fall out. The Chinese are long-term, big picture thinkers.

Side musing: more information about the 1099 gold and silver reporting. Click here.

debasing of the USDollar which means basic necessities become more expensive

“modified” CPI index at 1%, when it is really 9%, thus squeezing anyone on a fixed income tied to the inflation rate

VAT tax

I would like to bring up a point that I have brought up before. Americans are conditioned to get a weekly or monthly check whether that is from a private employer, a retirement fund, or a divided from an investment. It is happening now that many people can not rely on this pattern for a numbers of reasons. And it is certain that this pattern will continue. So, is there another way? Yes!

Small farmers, and others that make their living from the seasons, earn their income and do a year’s worth of spending during a few weeks in the fall. They then save the excess for the expenses throughout the coming year. Farmers take their crop/cattle to market, they get paid for the entire year. They buy next year’s seeds. They buy food products/clothes that they can not produce themselves for the next year. They pay any outstanding debts from the previous year, doctor bills, credit issued from grocery, mortgage, taxes (or save for when these things are due). They take home any excess. This requires alot of planning and budgeting. If the money falls short during the year, the family did side jobs to earn a little money to get by until the harvest.

I am not suggesting that you become a professional farmer. It is quite possible to do this same thing with investments. But you will have to plan for a year or more at a time. You will have to have a good understanding of the long-term market, just like farmers had a good understanding of the weather, when to plant, what to plant, etc.

Groovygirl is suggesting that this will be the new way to handle personal retirement savings. The economy is not going to “come back”. This is a winter cycle, followed by a spring cycle. This is a 30-40 year period of economic contraction and then slow growth.

You and your family will have to figure out how to live without a steady paycheck year after year. You will need to downsize, reduce debt, store food and essentials in good times to use in bad times. You will need to save and then invest. Then sell those investments to buy new investments that produce income for you and your family to live. This shift requires access to the truth about the economic state, patience, discipline, and lots of research.

It is unfortunate that we do not have a Joseph who can envision the inevitable, full of wisdom, and prepare for the seven lean years from the excess of the seven good years. Click here. You will have to be the Joseph for your own family, the government does not get it. We are now entering the lean years, get moving.

Side musing: 7 banks down last week and 6 the week before, click here. The banking crisis is not solved, just papered over and accounting rules modified. The rest will be taken down. That is not a solution, that is a disguise of the real problem, too much debt. The debt will win in the end.

Every $1 that the FED creates, only $.09 cents is productive in creating economic growth. Yuck! So where does the rest of it go? Fees…of course, and then the rest is being sucked up by the bottomless pit of debt. Incredible.

The year of Jubilee actually is a good idea.

Gold was the investment of the last decade, it will be the investment of the next decade as well.

Side musing: more information on how gold leasing works and its influence in gold manipulation. Click here.

Side-side musing: within the financial reform (now law) is language that will make the creative accounting that has been going on permanent. Click here. Accounting is now a completely subjective and creative science. Businesses will have to hire an expert to figure out the true value of the company, hedge fund or investment. The average investor, even if he/she understands how to read a balance sheet, will be completely lost. The rest of the world will not tolerate these rules. They will pull out and go somewhere else to invest where accounting is more transparent.

Update on the oil spill and hazardous chemicals: click here for a excellent article, a must read on the health problems going on now and the possible health problems in the future.